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U.S. Gasoline Demand Plummets Despite Low Oil Prices

Demand for gasoline in the United States fell by 859,000 bpd, the Energy Information Administration (EIA) said in its weekly petroleum status report. According to Reuters, this is the sharpest demand decline since last September.

Total fuel demand also declined, almost 2.1 million bpd last week, as lockdowns begin to weigh on consumption.

Earlier this month, Reuters reported gasoline pumps are sitting idle as people cancel their travel plans amid the worsening coronavirus outbreak that has so far infected more than 68,500 Americans and killed more than 1,000.

The situation is unusual. Gasoline is getting cheaper because of tanking crude oil prices, but drivers in the most car-loving country in the world cannot take advantage of these lower prices because they have to self-isolate at home. The United States consumes about 20 million bpd of oil and products, with gasoline consumption at 9 million bpd.

The worst is yet to come, according to analysts, as expectations are the number infected with Covid-19 will continue to rise for a while, possibly forcing an extension of the social distancing measures that prompted the drop in gasoline consumption.

“We would estimate commuting and leisure driving will be down up to 50%, with most impact in the northern states where the virus spreads faster now,” a partner in Rystad Energy told Reuters.

Related: World’s Largest Oil Trader Says Demand Could Plummet By 20 Million Bpd

The global situation for demand is not much better. Vitol’s chief executive Russell Hardy told Bloomberg earlier this week that the coronavirus pandemic could, at its peak, wipe out as much as 15 to 20 million bpd in global oil demand.

“It’s pretty huge in terms of anything we’ve had to deal with before,” Vitol’s chief executive said.

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Global oil storage is filling up fast in this context, Reuters reported earlier this week, despite rising costs of storage,--in some cases by as much as 100 percent.

By Irina Slav for Oilprice.com

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